Punch has this morning announced its interim results for the 28 weeks to 4 March 2017, which showed that like-for-like net-income declined 1.2% during the period across its leased and tenanted estate, including the Mercury division (H1 2016: 0.7% growth), but was flat after adjusting for the impact of the group’s previously flagged temporary slow-down in letting activity.
Underlying adjusted EBITDA for the period stood at £88m (H1 2016: £94m); which the company said reflected the impact of £53m of disposals completed over the last 12 months. Revenue stood at £217m (H1 2016: £212.9m)
Statutory loss before tax of £174m (H1 2016: £55m profit), included £198m of non-underlying charges, which the company said was principally due to the write-down in goodwill and assets following shareholder approval on 10 February 2017 for the sale of the group to Vine Acquisitions (Patron/Heineken).
The company said that it had made increased pub investment during the period with £41m of total capital expenditure (H1 2016: £25m), supporting the rollout of its Retail division.
It said it had made continued good progress in realising value from its extensive property portfolio with £18m of net disposal proceeds (H1 2016: £100m), £5m above book value (H1 2016: £13m)
Average outlet profit per pub across the company’s entire estate of 3,227 pubs declined by 0.3% during the half year.
The combined underlying results of the Core and Mercury divisions (before central costs) were down 4.6% on last year at £107m, which the company said reflected the impact of a 4.3% reduction in the size of the estate, having realised net proceeds of £53m over the last 12 months.
Like-for-like net income in the Core leased and tenanted division, after adjusting for the impact of disposals, was 1.2% down on last year.
As at April 2017 the company had 57 such commercial pub leases in operation with an average gross rent of £71,000 (November 2016: 46 free-of tie leases at £73,000 average rent).
The company said that its Falcon Retail contract had proved to be “extremely popular with prospective and new publicans, enabling us to double the size of this division since the August 2016 year end”.
The projected underlying pub EBITDA for the 171 pubs operating under the Falcon retail contract is between £90,000 and £105,000. The highest earning pub is projected to make c.£300,000 in underlying pub EBITDA this year, and the company said it now had a much clearer picture of which pubs work best under this Retail model.
Since the new regulations came into effect on 21 July 2016, the company said that 90 publicans had requested MRO comparison figures, of which three MRO leases had been concluded, 29 are currently under review with the publicans, with the remainder having been either concluded under a tied rent review or renewal, or lapsed.
The company said: “Our expectations, and early indications are, that the majority of publicans will continue to operate under, and enjoy the benefits of the tied drinks model, noting however that it remains relatively early days with the new legislation still less than 12 months old.”
Duncan Garrood, chief executive Punch, said: “During the period, we have doubled the size of our Retail estate and continue to innovate our operating agreements. This has been achieved whilst managing through a period of significant change, ahead of the sale of the group which is now expected to complete before the end of August 2017.”
